The Selection of Talent: Experimental and Structural Evidence from Ethiopia

Abstract

We study how search frictions in the labor market affect firms’ ability to recruit talented workers. In a field experiment in Ethiopia, we show that an employer can attract more talented applicants by offering a small monetary incentive for making a job application. Estimates from a structural model suggest that the intervention is effective because the cost of making a job application is large, and positively correlated with jobseeker ability. We provide evidence that this positive correlation is driven by dynamic selection. In a second experiment, we show that local recruiters underestimate the positive impacts of application incentives. (JEL J23, J24, J31, J64, O15)

How Wage Announcements Affect Job Search— A Field Experiment

“…Interestingly, the wage elasticity of around 0.7 that we find across a large number of occupations in the UK is similar to their finding for this specific occupation in Mexico, and is also similar to the non-experimental elasticity reported in Marinescu and Wolthoff (2014) for the US once they control for job title. Abebe et al (2017) advertise three-months clerical positions in Ethiopia and find qualita-tively similar results to Dal Bó et al (2013), though the wage elasticity of assessment centre attendance is substantially lower, but in their case the job is temporary and one might conjecture that a similar salary increase for a permanent job might lead to a higher response. They also document particularly high application costs in their setting and show benefits of application subsidies.…”

Informational Barriers to Market Access: Experimental Evidence from Liberian Firms

“…cation procedures and knowledge barriers constrain qualified-but-underrepresented individuals' educational, labor market, and social assistance choices (see e.g. Jensen, 2010;Bettinger et al, 2012;Kling et al, 2012;Chetty & Saez, 2013;Carranza et al, 2020;Hardy & McCasland, 2020;Abebe et al, 2021;Bassi & Nansamba, forthcoming). We add to growing evidence that informational barriers can be surprisingly costly to overcome also for firms (see e.g.…”

Learning Management through Matching: A Field Experiment Using Mechanism Design

“…Differences in structured management practices are associated with productivity differences in firms throughout the size distribution, and firms in the developing world tend to have the worst management practices (Bloom and Van Reenen, 2007;McKenzie and Woodruff, 2017). Management also matters at the individual level (Bandiera, Hansen, Prat, and Sadun, 2017): managers who are not effective leaders of their organizations may forego productive investments (Atkin, Chaudhry, Chaudry, Khandelwal, and Verhoogen, 2017) or fail to recruit the most productive workers (Abebe, Caria, and Ortiz-Opsina, 2018). Less is known about how future managers are made.…”